Dimension Polyant explains the benefits of a Duty Drawback program

Ken Madsen, CEO of Dimension Polyant, explains the benefits of a Duty Drawback program to Jay Charkow, President of International Tariff Management. 

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Transcript

Jay Charkow:

Well, I'm very lucky today. With me I have Ken Madsen, President of Dimension Polyant, who we have a long relationship with as we’ve been partners for over 15 years. I think it's been a mutually beneficial relationship. What I'd like to do is introduce Ken and let him explain a little bit about what his company does. Good afternoon, Ken. Thanks for joining us.

Ken Madsen:

Good afternoon, Jay. And thank you very much for inviting me. To answer your question about what is Dimension Polyant doing? Well, Dimension Polyant is a worldwide leader in sail class fabrics. So fabrics for yacht sails, and most people would probably think about yacht sails as being this canvas type material but, it's much more complex than that. In fact, we make standard styles here with about 400 that we have on our worldwide price list. And we, we make some of those products here in Putnam, CT. We also make some of them in our headquarters plant in Germany. On top of that, we make about a thousand different products a year. Most of it for the surplus industry or sail making industry but also to other industries. We have diversified our technology to reach outdoor markets where we are a high-end market leaders in fabrics for backpacks and functional fashion.  Also conveyor belts, light reflection, materials, drum skins, and many areas which require flexible composites. I like to say, it's not that old traditional canvas material anymore. What we manufacture is carbon fiber fabrics, reinforced Kevlar, and laminated fabrics with solvent-based adhesives. And that doesn't necessarily sound nice for the environment but, do use manufacturing devices so that when we use solvent in the process, we clean up after us. And what we release in the air is more than 99.9% clean. We use a solvent because it makes the best adhesive.  Water-based adhesive solids are just not good enough to reach the high loads that we need in sail cloth. We make about 4 million square meters of material here a year. It’s not a huge operation, it's all niche specialty product but still, 4 million yards or square meters is quite a volume of fabric. 

Jay Charkow:

Well, that's interesting. I know when I was there, I was very impressed with the efficiency and the diversification of your company when we started a duty drawback program. Because you do import items and pay duty on them, and you subsequently export those items, the idea is to get back the duties that you paid when you imported. Why did you decide to start a duty drawback program?

Ken Madsen:

Well, it's not easy to be competitive in the textile business in North America. We did however see an opportunity to add to our bottom line. We make certain products in our German plant and from the location here in Putnam, Connecticut, we distribute to the Americas. So when we distribute to Canada and, or the Central American and South American countries, we saw an opportunity to get some of the Duties back on the products we import from our plant in Germany. It's a matter of staying competitive and being able to keep the business in North American instead of being forced to moving it overseas.

Jay Charkow: 

Well, that's, that's an excellent reason. I know that duty drawback can help companies do that. Sometimes people are concerned when starting a program, that it's a complicated and difficult to get started. Was it difficult for you to initiate the program and once it got started, was it more like a routine and did it work better?

Ken Madsen:

That's a good question because yes, it was difficult when we tried to do it ourselves. You quickly run into a lot of customs related issues that we are not the experts in. We are experts in making flexible composites but not in U.S. Customs language. We are not familiar with U.S. Tariffs and don’t have time to read 2000 pages of Tariff regulations. So yes, initially it was complex to start it up, but we quickly concluded that we were much better off going outside for assistance. I think at that point, I probably did a simple Google search and found International Tariff Management and reached out to you. I think I jumped in my car, drove down to meet you and see what you folks were all about. And I think immediately we saw there was a real good match here for achieving our objective. As soon as you got on board, I think we had one more meeting in Putnam figuring out what we were doing, showing you around and from there on, it was pretty smooth sailing. Our accountants had to learn how to communicate with you and since then it has been total routine.

Jay Charkow:

Well, I know you mentioned and emphasized, it's difficult to get started on your own. One of the things we try to do and pride ourselves in making sure that we're sensitive to the customer's needs and knowledgeable about what has to be done. Were you happy with that aspect of what we provided?

Ken Madsen:

Absolutely, we were very happy about it, because I think there was a real good understanding of our needs and our materials. I think any business would probably claim that our business is very unique, but what I truly think makes our business unique is that we manufacture a lot of different fabrics. ITM had a very good understanding of it and grasped the concepts very quickly. So with you, it was an easy process.

Jay Charkow:

Is there any advice you would give other companies that were thinking about starting up a drawback program - from your own experience and history of doing it - that could help them initiate a program?

Ken Madsen:

Yes, the first advice would be to jump out and get started. The sooner, the better. I think if I recall, right when we started, we were, we were three years, uh, or there was a grace period of three years. So we could go three years back in time. So basically, any minute that you lose is lost revenue. So, jump out and get started. I think there's nothing intimidating about it once you get started. If you try to do it yourself, it's a hurdle, particularly for relatively lean company. Like I mentioned, at Dimension Polyant where we don't have people sitting around waiting to take on such a task.

Jay Charkow:

As we talk here, it reminds me that you have been one of our customers that has taken full advantage of everything that we offer. We've done duty drawback, and we also get involved in the free trade agreements of which I know you had some issues with Australia, and we also get involved in the harmonized tariff schedule of classifying goods. Could you comment a little bit about how we helped you in those areas?

Ken Madsen:

Sure. With the harmonized schedules, I have several letters in my file or they sit with our supply chain group now. But letters where we said, “Hey Jay, we have this new product we intend to import. And we would like to optimize the Tariffs that we're going to pay on it.” We then sent samples down to your office and shortly thereafter, we simply got a letter saying for this and that reason, we think it should bea certain Tariff number in the US, and this is tariff you're going to pay on the import. So that has been very, very simple. And also, when I think back on the discussions we had about free trade agreements with Australia, having a letter in your file was a very good idea. If you could provide such a letter to U.S. Customs and particularly if it stated that years ago, we have established proceedings for this procedure for good reasons, that was very convincing to U.S. Customs so I think it has been money well spent to go through those exercises. It was very simple to do and cost very little money in the big picture. And it's worth our while for sure.

Jay Charkow:

Well, I truly appreciate your kind words about that. I understand during these difficult times in the pandemic that, Dimension Polyant has done some wonderful things to help out the people that have been affected by this. Could you give me a few comments about what you did to help?

Ken Madsen:

Yes, we are in a fortunate situation that we have many different types of machines in our portfolio. We pride ourselves of being the go-to shop that can solve anything in flexible composites and advanced textiles. So when the pandemic hit, we had customers that came to us and asked how can we work together and help solve the problem of the pandemic. Many of our customers are relative small shops. They are sail makers or they are back-pack makers, and they don't have heavy lifting equipment so they can’t buy film from the film suppliers that supply a roll of film that might weigh a thousand pounds. Our customers can simply not lift it because they don't have the equipment. So one of the initiatives we jumped into with many customers was to provide material for face shields, not face mask, but face shields. So the actual plastic material that goes on the face shield, we have been supplying. I was just walking through our production facility and out on the floor, I'm very proud to say they the next three pallets of material going out to a customer will take us the equivalent of 1 million face shields that have been made with material that we supply. That's wonderful. I hope it has helped some people out there. I'm quite positive that it does.

Jay Charkow:

I'm sure it will. Well Ken, I really appreciate, your relationship with us. We've had a long, good relationship for 15 years and I am sure it will continue, and we will continue as friends I hope and do business together going forward. Again, thank you very much for joining us.

Ken Madsen:

You are very welcome, Jay, I appreciate everything you do for us. Thank you very much.